Last week, the Michigan Chamber testified in support of legislation to provide transparency in asbestos litigation by requiring plaintiffs to file bankruptcy claims at the beginning of the tort process and disclose those claims during any litigation. Similar legislation has been enacted in 12 states, including Ohio and Wisconsin.
Asbestos bankruptcy trusts were created through federal bankruptcy law by companies most directly responsible for asbestos injuries, such as companies that mined asbestos or manufactured asbestos-containing thermal insulation. To date, more than 100 asbestos defendants have filed for bankruptcy protection and the US General Accounting Office has estimated there are roughly 60 trusts in operation today, holding some $25 billion to pay future claims. The average person alleging that asbestos exposure caused his or her mesothelioma will file claims with more than 20 trusts and collect about $600,000 in compensation through this process.
Plaintiffs often commonly sue companies that have not filed for bankruptcy through the regular tort system. These companies, though, are often peripheral to any wrongdoings. They may be local plumbing supply companies, hardware stores, auto dealers or manufactures of secondary products. Richard Scruggs, a famous plaintiffs’ attorney, once called finding companies to sue in asbestos litigation an “endless search for a solvent bystander.”
The problem isn’t that plaintiffs’ attorneys are filing claims with both the trusts and courts, but rather that in the lawsuits against peripheral defendants, the plaintiff’s lawyers are sometimes hiding the fact from juries that they also blame bankrupt companies for their asbestos-related injury. Why is this a problem? Juries and judges cannot properly apportion fault if they are blindfolded from these other allegations.
HB 5456, pushed by the Michigan Chamber, solves this problem through basic disclosure requirements. It requires plaintiffs’ attorneys to disclose to the defendants the bankrupt trust claims they can file based on the plaintiff’s exposure histor; to file those trust claims before trial; and to provide the trust claim forms to the defendants so that, at trial, the jury can hear all the facts, including their lifetime exposures, and properly determine fault.
HB 5456 does not impose caps on a plaintiff’s ability to receive compensation or limit claims against trusts. What the legislation attempts to do is accelerate the timing of asbestos trust claim filings in order to promote fairness and transparency.
Please contact Wendy Block at (517) 371-7638 or firstname.lastname@example.org if you would like further information or to engage in this issue.